When can an EB-5 investor expect return of their investment?

The timing and likelihood of receiving a return (profit and/or principal) on any EB-5 investment will depend upon the individual project. There are some large regional centers that have been around for more than five years that have publicized how many approvals they have and how many investors have received a return of their initial investment. Past performance, however, is no guarantee of future results. The EB-5 law prohibits the return of any invested capital (not including profits) prior to the removal of the investor's two-year condition. There are no publicly available statistics regarding what percentage of EB-5 investments have been returned.

The investment funds have to be 100 percent at risk. There can be no redemption agreement to guarantee the return of any part of the investment funds. In an EB-5 regional center context the investors invest in a new commercial enterprise. The new commercial enterprise then can loan all the funds to the job creating entity. The loan agreement will usually provide collateral of the job creating entity for the repayment of the loan in full to the new commercial enterprise. Once the loan funds are repaid then the investors can sell their interests in the new commercial enterprise at fair market value which can be worth $500,000. Please note there can be no guarantees for the return of any portion of the investment amount.

The time and terms of return on investment vary with each project. A rule of thumb used to be five years after the initial receipt of the green card approval. There are no reports that I am aware of, showing overall success or lack of success in return of investment. You must perform due diligence before you invest.

The EB-5 investment that you make generally can be paid back to you after the conditions on your residency are removed. This typically occurs around year four or five from when you filed the I-526 petition. You will want to consider the offering documents for each project you consider, as there is no uniformity between the many projects out there. With hundreds of regional centers, each one can be different, with some offering loan-based projects and others providing equity in exchange for your investment. Loan-based projects typically set an exit strategy that allows you to be repaid after your conditions are removed and equity-based projects may require keeping your investment for a longer period. As well, statistics across the EB-5 marketplace may be difficult to obtain - at least in terms of percentage of success among all projects. What you will find is a success rate that can be measured among a select number of regional centers and projects. For more information about the EB-5 project, an experienced attorney should be consulted.

Return on investment varies by project (if investing in a regional center project) or it will be governed by business documentation (if investing in a direct EB-5 case). If you are investing in a regional center project, please review offering documentation, such as the limited partnership agreement, private placement memorandum, and subscription agreement for terms governing the return of your capital contribution (investment). It is generally advisable that you consult an EB-5 immigration attorney and possibly business counsel to assist you and give you competent legal advice.

In order to remove the condition on your green card, you should keep your investment in place until the I-829 is adjudicated, which will put the timeline at a minimum four and a half years after you made the investment. Thus, most of the regional centers that will do the project on a loan-base will have the loan payback at five to six years. For the Chinese nationals with the current retrogression in place, it will be safer to have the loan term at six years rather than five. Finally, it is worth noting that out of 600+ regional centers out there, there are only three regional centers that have been able to return the investor funds after the I-829s have been approved, thus far. Therefore, it is very important to review carefully the private placement memorandum, partnership and subscription agreements to check on the exact terms of what, when and how things are supposed to happen.

By regulation, your investment must be sustained throughout the entire period of conditional permanent residency, so in practice, that is a timeline that goes from the time you make your investment, through the I-526 process, through the conditional permanent residency period, and until you receive full lawful permanent residency. In addition, EB-5 projects often have provisions to hold investments through the entire EB-5 process and five years from the date of investment (that is, both the five year timeline and the immigration process needs to be completed, even if the immigration process lasts longer than five years).